No retrospection

The taxpayer owned a stable block which he converted into a house for himself and his family. It was next to a larger property owned by his parents

Planning permission had been granted on the basis the stable was not to be used as a separate residential unit but be ancillary to the larger property.

Three years later in 2010 the planning authority issued a new permission which excluded the “ancillary occupation” condition and described the stable as a “separate dwelling”.

In light of the change the taxpayer submitted a claim to HMRC for repayment of the VAT incurred on the conversion. The department refused saying the original planning permission referred to “ancillary occupation” that disqualified the build from a refund under VATA 1994 Sch 8 group 5 note 2(c).

The First-tier Tribunal noted that all the conversion work had been carried out...